Green Mountain rolling out latest Keurig brewer

AnnieGasparro

NEW YORK (MarketWatch) -- Green Mountain Coffee Roasters Inc.
GMCR, +1.12%
the maker of Keurig machines, is coming out with a new single-serve coffee brewer called the Vue, intending to draw in a fancier crowd of cappuccino and latte drinkers.

The Vermont-based company has grown up fast since the single-serve coffee industry has taken off. It was one of the best-performing stocks last year, until hedge-fund manager David Einhorn's vocal claims that it was inflating sales sent shares tumbling last fall. Green Mountain's latest earnings report on Feb. 1 showed a sharp jump in revenue, countering Einhorn's allegations and sending shares up more than 25%. However, Tuesday's close of $67.32 is still down 40% from September's levels.

The new brewer, which adjusts water pressure, timing and airflow to brew different ways, also includes separate dairy frother packs for adding foam to make specialty coffee drinks.

Green Mountain says this new "premium" brewer, priced at $249.99, will expand its customer base by attracting a higher-income demographic--similar to the type of people who were first to buy the original Keurig machines. The Vue marks a substantial trade-up from traditional Keurig brewers, which can be bought for less than half the price.

Green Mountain still faces a number of challenges, including broader pressure on consumers amid a sluggish economy, and looming competition from Wal-Mart Stores Inc. (WMT), which plans to introduce its own brewers.

Green Mountain will start selling the Vue V700 brewer and its Vue packs in the next few weeks. "As with the K-Cup system, the company would envision introducing models at various price points down the road," a spokesperson said. For example, a commercial Vue brewer for workplace use will come out this fall.

While some existing Keurig users will trade up to this next generation, Green Mountain doesn't intend to phase out the original Keurigs. It has said it plans to add more types of K-cup coffee packs to the traditional Keurig line that will make it attractive to that lower-income demographic that Wal-Mart is targeting.

Green Mountain has deals to make K-cups with practically all the leading coffee makers in the U.S., including Starbucks Corp. (SBUX) and Dunkin' Brands Group Inc. (DNKN). Vue packs will debut with more than 30 varieties, including brands like Caribou Coffee and Celestial Seasonings. Green Mountain expects to have up to 50 types by the end of June.

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